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Fine Gael Copping on at Last
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A few months ago Michael Taft highlighted the fact that ESB prices were being kept artificially high to support competition. Now while Michael and me might disagree on alot I can not disagree with a policy that dictates the use of the common market (break up of the ESB is another option that I think we would disagree on anyway).
So today when the ESB comes out and says we want to cut prices (of course you could say they want to out do rivals but…..) Fine Gael jump on the bandwagon. In his analysis Michael advised Fine Gael to attack on this. But they didn’t and are not in government. 3 months to late to cop on. Twits.
I think the ESB may get the credit for political yards run on this one. Their conference today ticked all the right boxes and promises of lower prices if government got out of the way is likely to work in their favour.
Of course government policy was to keep price high to encourage competition so it will be interesting to see what the regulator does (and the nod/wink he might get from the Dept Energy). Credit will go to ESB if it happens, and they will likely slow the splitting of the market by staving off price increases.
The penny, if not electricity prices, is starting to drop. The ESB report stated ‘As regards price increases, ESB has the task of communicating to electricity users that it is only one of a number of market players. It needs to be clearly understood that price increases are no longer exclusively or even mainly driven by ESB. Prices are determined by the independent Regulator and are designed to attract and reward new entrants to the market. In fact, ESB is currently not permitted to sell electricity to its customers at a price below that fixed by the Regulator. The sooner this restriction is lifted the sooner the efficiencies and savings achieved in recent years by ESB as well as any reduction in fuel costs can be passed on to our customers.’
It should also be noted that, yet again, labour costs and staff numbers are falling while maintenance costs are also declining. Fine Gael is right to call for the Regulator only to set a ‘maximum’ price but let electricity providers compete below that ceiling. Some common sense is starting to creep in, however slowly. It will be interesting to see the Minister’s reaction to all this.
But surely competition must lead to lower prices? Why would prices need to be kept high to encourage new entrants?
Initial costs in a monopolistic market.